What It Means To Miss New Orleans

A cheer went up in the New Orleans media community last week over the return of something as vital as water in their business: ratings. For the first time since Hurricane Katrina blew through town, radio-audience–measurement service Arbitron issued a book for the market.

True, Arbitrons aren’t Nielsens and, hence, don’t dramatically help TV stations, which also have spent the past year without any audience measurement. But it’s a glimmer of evidence for advertising sales folk, stations and advertisers that the media market is getting back to something approaching normal.

Unfortunately, “normal” means a shrunken market. Research firm Claritas estimates that the New Orleans market’s population has shrunk by 20%, from almost 1.1 million to 864,000. In the core Orleans Parish, the depopulation is more stark: off 48%, from 384,000 to 200,000.

Before the storm, Nielsen Media ranked New Orleans as the 43rd-largest market. This week, the firm will likely drop the market to No. 54.

With thousands of people leaving town, TV stations have far fewer viewers to sell advertisers and possibly many fewer businesses to buy advertising. For a long time, New Orleans may stay out of the top 50 markets targeted by many national advertisers.

For local cable operators Cox Communications and Charter Communications, the homes of thousands of former subscribers may never be rebuilt. Cox’s New Orleans system acknowledges $115 million in system damage and lost revenues for 2005. That tab will probably pass $200 million later this year.

Lost revenues, station damage and extra operating costs probably amount to $100 million for local TV stations. Hearst-Argyle took a permanent charge against the value of its New Orleans station, writing off $29.2 million.

Still, broadcasters’ fiscal damage is limited because advertising has quickly snapped back. Broadcast-research group BIA estimates that, before Katrina, TV stations sold around $110 million in advertising per year. Today, they are very close to matching that. Station executives estimate that local ad sales are about 80% of pre-storm levels. That’s because insurance companies and FEMA are helping to replace everything that Katrina destroyed,

Look at the biggest TV-ad category: cars. National Insurance Crime Bureau estimates that around 200,000 cars were destroyed in Louisiana. That’s easily $2 billion in vehicles that need to be replaced, and New Orleans dealers are fighting for their piece. Automakers are pouring ad money into the market, while dealers that have never advertised on TV are suddenly clamoring for time.

However, a lot of other advertisers haven’t come back. The biggest is fast-food restaurants, which largely have not reopened. Unable to get workers at affordable wages, only a third of the big burger and chicken chains have reopened outlets.

A big challenge for ad buyers and sellers has been the lack of Nielsen ratings. With so many homes shattered and members of its sample scattered to other cities, the audience-research company hasn’t issued a quarterly book since July 2005 and won’t resume monitoring until February. It is in the process of recruiting viewers for a new ratings panel and expects a sample of 350 homes to be up and running by February; that should grow to 400 homes by May.

The lack of ratings has led to a different method of negotiating ad prices. “We’ve been paying based on supply and demand,” says Joann Habisreitinger, media director for local ad agency Zehnder Media. Advertisers have to bid up to get hot time periods, and news and local avails in sports programming are the hardest to get.

Federal aid and insurance money are fueling the fragile economy. “Our pricing is pretty much where it was pre-Katrina,” says Mike Zikmund, general sales manager for Belo Corp.’s WWL. “There’s been a lot of demand, and everybody’s jockeying for position.”

BIG LOSSES FOR COX

Cox has had a much rougher time coming back. Katrina badly chewed up the wires of its system, blowing down aerial plant and flooding underground trunks. Operations were restored fairly quickly, and the system is serving 180,000 subscribers. But that’s 100,000 fewer than before Katrina.

Cox’s plant in the suburbs and much of New Orleans has been up and running for months. However, the story’s different in the hardest-hit areas: New Orleans East, the lower 9th Ward and St. Bernard Parish. Much of that plant is underground and was badly flooded.

And there is no rest for the rebuilders. Cox VP of Government Affairs Steve Sawyer says that, as workers scoop up old drywall, plywood and other trash, they unknowingly—or uncaringly—tear the pedestals where Cox’s cable system pokes up above the ground to serve neighborhoods. “We’ve almost suffered more damage post-storm.”